Freemium

The “Free” Illusion There is no such thing as a free app. If an app is “free,” it is one of two things: You are the product (they are selling your data/ads). It is a marketing channel for a paid product (Freemium). Freemium is the dominant business model for modern B2C SaaS. But getting it right is arguably the hardest challenge in product strategy. The Economics of Generosity Why give your hard work away for free? Because Customer Acquisition Cost (CAC) is expensive. Running ads on Facebook and Google to get someone to download a $5 app is often unsustainable. ...

The Famous Threat In 2009, Costco’s then-CEO came to the founder, Jim Sinegal, and said, “Jim, we can’t sell this hot dog for $1.50 anymore. We are losing our shirts.” Sinegal replied with the now-famous line: “If you raise the effing hot dog, I will kill you. Figure it out.” So, they built their own hot dog factories just to keep the price down. They refused to break the $1.50 price point. ...